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Siebel may trigger hybrid approach with hosted CRM

Siebel's new hosted CRM strategy may, in the short-term, force Siebel's sales force to work against itself. But in the long run, it may offer customers a transition.

While Siebel Systems' new hosted offering, CRM OnDemand, may be targeted in part at small and midmarket businesses, there is little doubt that its real value proposition is with divisions within large enterprise firms, especially those that are existing Siebel customers. In the words of the Yankee Group's Sheryl Kingstone, "the slam-dunk for Siebel is the hybrid solution. The small market doesn't need this."

Siebel's entry into hosted applications is a partnership with IBM that leverages Big Blue's significant marketing machine. Siebel's ability to offer a hosted application for new customers as well as partnership with on-premise applications may, in the short-term, force Siebel's sales force to work against itself. But in the long run, it may offer customers a transition.

"Both is better than one or the other," said David Schmaier, an executive vice president at Siebel. "If it cannibalizes us some, it's better that we do it to ourselves."

Yet with a host of hosted applications available, a hybrid solution needs more than just the name of an advanced enterprise application tied to it. Siebel has positioned its market-leading analytic capabilities as a differentiator for CRM OnDemand. The San Mateo, Calif., company plans to add a greater argument for companies looking to use the hosted model for a new division: integration with on-premise Siebel applications.

At its 2003 User Week conference, Siebel unveiled plans to support OnDemand with Siebel 6.3 up to 7.5. That integration provides immediate value for companies opening new divisions, product managers said.

For example, a company based in the United States that opens a new office in Australia would be able to get the new office up and running with OnDemand quickly, without the necessary startup costs, time and IT support. Features such as sales forecasting could then sync with the corporate enterprise application.

However, the timeline for integration among OnDemand and enterprise applications, as well as the pricing structure, has yet to be determined.

Nevertheless, the possibility of quick startup and integration with current enterprise systems is an intriguing option for some of the users at User Week. For CUMIS Group Ltd., a Canadian insurance company, the potential to switch one of its partner's applications to OnDemand and integrate with the enterprise application at CUMIS makes sense.

"We're very small, and Siebel's very expensive and very complex," said Karen MacKeller, IT relationship manager for CUMIS.

The ability to control all the data flowing between CUMIS systems and its partner holds promise. Cost remains the big question, MacKeller said.

"One negative is that it seems to be very pipeline-focused," she added after seeing the User Week presentation.

Siebel's OnDemand integration is focused on three actions, development managers said. First of all, synchronization between the satellite office and the corporate office can work automatically. For example, when contact information is changed in a new satellite office, it synchronizes with the corporate database. That information can both be pushed to corporate and pulled from corporate.

When combined with Siebel's predictive analytics, currently not offered in OnDemand, businesses can leverage the enterprise version to offer those very capabilities. For example, corporate can forward information to the satellite office that will show, using the predictive analytics, what product a customer is most likely to buy next.

Finally, the integration will be able to extend to business practices. Following the U.S.-Australia example, when a deal has been closed with a customer, the system in both locations will recognize that the customer is no longer a prospect but now someone entitled to customer service. Additionally, that information will be included with sales forecasting reports at both ends.

Similarly, lead generation from the enterprise application can be pushed out to Australia. Through a Universal Application Network, OnDemand will be integrated with multiple applications, product developers said.

OnDemand will initially support business processes in account management, contact management, operational management and service management, developers said.

For Corwin Jennings, information services manager for the office of the ombudsman for the U.S. Department of Education, OnDemand integration is attractive for the possibility of linking data from the myriad of applications his organization currently runs through enterprise analytics.

"This gives us an option for integrating the enterprise but not buying the whole package," Jennings said.

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